Port Hedland cafe owner Ray Sampson has been looking for a one-bedroom unit that his son, who is also the cafe’s chef, can rent in the post-mining boom property market.

“The agent said the old tenants paid $1600 a week," Mr Sampson said.

“I got them down to $850. It’s a good thing prices are down, but I think it still needs to come down further."

The dramatic shift in power away from landlords to tenants and buyers in Australia’s busiest iron ore export hub is tightly bound to the sharp pull back in resources construction projects.

The construction staff who used to fill the Western Australian towns’ private housing – and delivered landlords huge capital gains and double-digit yields – have left, leaving behind an abundance of homes.

There are more than 300 houses and land sites on the market in Port Hedland and South Hedland, according to property searches. These areas were difficult to buy into just 18 months ago.

In the 12 months to June, rents dropped 27 per cent in Port Hedland and 15 per cent in South Hedland, according to the Pilbara Development Commission Housing Snapshot.

The weekly rent Mr Sampson pays on his own home has come down from about $1400 during the boom years to $800.

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“The real estate companies are still talking it up and I guess they have to," Mr Sampson said.

“I never bought – I could never afford to. But those investors who missed the boom and paid $1 million for an asbestos shack must be hurting."

Late investors facing difficult period

The median house price in Port Hedland rose in the 12 months to June from $1.15 million to $1.2 million, which analysts have put down to a reduced turnover masking true house values.

Furthermore, many property owners who had huge price rises are in a financial position that enables them to hold onto their property, rather than sell, in the hope that conditions will improve.

This hides the actual price reductions since the home owner doesn’t test the market.

Gavin Hegney, of property valuers Hegney Property Group, said a lack of supply during the boom years meant house values rose to unsustainable levels. “It created values that never should have been there," Mr Hegney said.

He said those who invested in the region near the end of the boom were facing a difficult period.

“It’s like getting to the party when people are starting to leave," he said.

Port Hedland is still a busy export hub. Its September cargo statistics show iron ore exports have risen almost 6 per cent on the previous month and 33 per cent in the year so far.

Total exports, which include copper, manganese and salt, totalled 29.5 million tonnes in September.

But it is the pull back in capital-intensive construction projects, such as
BHP Billiton
’s decision last year to suspend its outer harbour development plans, that has underpinned the dramatic reduction in demand for rentals.

Those who bought older homes are expected to suffer the most, due to competition from newer, more affordable housing options. Listed property company
Cedar Woods Properties
has sold all but a handful of its 130-lot South Hedland development, Elements.

Most buyers anticipate that they can build a $400,000 home on their $300,000 lot – many of which are about 500 square metres – compared with a median house price of just below $900,000 in South Hedland.

“A lot of the stock up there would appear to be ambitiously priced," Cedar Woods state manager Stuart Duplock said. “It’s a hangover from the glory days of the boom."